A position may be a means to satisfy an interest, but it is not necessarily the only way—or the best way—to do so.
Focusing on positions is not productive. It often leads to interests being overlooked. If you advance your position of wanting a raise, your boss will defend his position of being unable to give you one, and neither of you would consider other options that might address your interests.
People become attached to their positions. If they abandon or change a position, they appear wishy-washy and lose face. Defending your position can be against your interests, yet you may not notice it as you strive to project strength and consistency. This can get personal and damage the relationship between the parties.
Don’t get bogged down in positions. Instead, focus on your interests, what is most important to you. It’s also important that you can satisfy the interests of the other party, at least in part, or they may not continue to negotiate with you.
IDENTIFYING INTERESTS
For each position advanced by you or your counterpart, you need to ask: “Why? What purpose does it serve?” This enables you to uncover the underlying interest behind each position. A rule of thumb is to determine whether there is more than one way to satisfy a demand. If not, you are dealing with an interest.
For example, you may want a pay raise as a form of recognition by your company of your value and contribution over the years. There may be other ways of getting the recognition you crave: a new title, a promotion, more perks, or additional responsibilities. Thus your opening position might be “I want a raise,” but your true interest might be “I deserve more recognition.”
You may have heard an old story about two sisters squabbling over an orange. Each sister clings to her own position, which is that she is entitled to the orange. Obviously, they cannot both have the orange. Eventually, after much argument, the sisters reveal their true interests. One wants orange juice, and the other wants to grate the rind to flavor a cake.
The sisters’ original positions are incompatible and mutually exclusive. If one gets the orange, the other doesn’t—a win-lose outcome. Or they can do what most fair-minded people will do: compromise! They could cut the orange in half, so each gets something but neither gets what she wants. Perhaps half an orange does not yield enough juice to satisfy one sister’s thirst, and does not have enough rind to flavor a cake. In addition, some of the juice and rind are unproductively given to the party who does not value it. Ideally, you want to optimize the allocation of all the currencies available in a negotiation, without any leakage.
Only by identifying and sharing their interests do they find a way for each sister to get everything she wants. In this way, both parties may be able to satisfy their interests fully, even when their positions are incompatible.
You may think that the story of the squabbling sisters is quaint and contrived, and that nothing like it could ever happen in the real world. It can and it does, and for very high stakes.
In 1979, Egypt and Israel signed a peace treaty. A major stumbling block to the agreement had been the disposition of the Sinai Peninsula. Historically part of Egypt, it was captured by Israel during the Six Day War in 1967. Israel insisted on retaining all or part of it, while Egypt demanded the entire area. The positions were clearly incompatible.
Agreement was reached only after both parties’ interests were addressed. Israel did not really want the land per se; it wanted the security buffer the land provided. Egypt did not require all of the attributes of sovereignty; it only wanted its traditional patrimony to be made whole. It was willing to demilitarize portions of it to achieve its main interest. Israel returned the land in exchange for security guarantees, and both parties’ interests were satisfied in full—a win-win outcome.
PRIORITIZING INTERESTS
Make a wish list of all the things you could possibly get out of a negotiation. For each item, ask yourself “Why?” (perhaps more than once) to determine your true interests. Prioritize them so you are clear on which are most important to you. For a simple negotiation, it might be enough to create three categories: high, medium, and low priorities, or the three categories may be: what you must have, what you really want, and what would be nice to have.
It is tempting to say, “Everything is important to me! I want this and this and that!” But not everything is equally important. To be more realistic and disciplined about your priorities, list all of your interests. Then assign each interest a numerical weight such that the weighted value of all your interests totals 100 points. This will help you focus your attention on what matters to you most. It will protect you from exchanging good value for something trivial (a shiny bauble!) while forgetting all about your main objectives.
Try to anticipate the other party’s interests and priorities as well. You may not be able to rank them with precision, but you could probably determine which ones he considers to be very important, somewhat important, or of low importance.
SHARING INFORMATION ABOUT INTERESTS
It’s amazing how secretive people can be during a negotiation. Negotiators talk and listen to one another, but they often do not share much information. No doubt this is because information is power, and we want to have more power than the other party. We behave as though anything we say will be used against us. However, hoarding information and treating every bit of data like it’s top secret is counterproductive.
Most negotiators are far more guarded about disclosing information than they should be. Recall that negotiation can be thought of as joint problem solving. If you don’t share information with your counterpart, how can she help you solve your problem? If your counterpart knows your interests, she might be able to think of a solution that you may have overlooked. As the old saying goes, two heads are better than one.
Remember our squabbling sisters? In the heat of conflict, they see each other as rivals and may not be inclined to communicate freely, much less share critical information. But what if one had said “I need the orange because I want to grate the rind for my cake”? Chances are the other would have replied “Is that all? I only want a glass of orange juice.” Problem solved.
Sharing information about interests increases the likelihood of a win-win outcome. It also encourages trust. After all, it’s hard to trust someone who acts secretively. If you share information, your counterpart is likely to reciprocate. You both benefit.
But what if they don’t reciprocate? Will that put you at a disadvantage? The answer is no. Sharing information about interests is a key to a win-win result, even if the other party does not reciprocate. By making your interests known, they are more likely to be able to help you. You need not agree to anything that does not satisfy your interests, and knowledge of your interests by the other party can help her find a way to satisfy them. If you share information about your interests and they don’t reciprocate, it only makes it harder for you to help them.
The general rule is that you should share information about your interests. Think carefully about whether to share other kinds of information. You may not want to share information about your bottom line, your Plan B, deadlines, trade secrets, or other sensitive matters, at least not right away. But don’t assume that sensitive information should never be revealed. Reassess the value of sharing sensitive information as the negotiation progresses.
For example, you probably would not volunteer information about your budget or time constraints early on. If a salesman knew what your budget was, he would find a way to get all of it. But let’s say you were willing to spend your entire budget, but the salesman kept demanding more. Revealing your budget would provide a reality check, and once he realized he couldn’t get his demand, he might become more accommodating in order to close the deal.
Similarly, suppose you had a tight deadline. If your counterpart knew you were on a tight deadline, he might use that to pressure you into a deal that was not very favorable for you. But if you were happy with your proposal and your counterpart was using delay tactics to try to get m
ore from you, you might reveal your deadline and pressure him to accept your terms quickly.
As the negotiation unfolds, information that could hurt you if revealed too soon might later be used to your advantage. Continuously reassess whether a certain piece of information is best shared or kept secret.
CURRENCIES
A currency is anything of value—tangible or intangible—that can be exchanged in a negotiation. Of course, the best known currency is money. There is also the product or service the money is being exchanged for. But there are many other currencies, including method of payment, delivery schedule, allocation of risk, timing, other terms and conditions, brand and reputation, emotional needs, perceptions, and anything else of value. It isn’t just about price.
If you are negotiating only on price, you are setting yourself up for a win-lose outcome. For example, let’s say we are negotiating the price of bottled water. Every extra dollar in my pocket is one less dollar for you. But if I buy a thousand cases, can I get a discount? And what if I pay cash today rather than send you a check in thirty days? And what if I want the name of my business printed on the label? Or a fancy, faux crystal bottle design instead of the plain one? Now we have a lot of currencies we can trade, not just price. The more currencies we can introduce into the mix, the more options we have, and the better the chances that one of them will be a win-win.
How do you prepare for exchanging currencies in a negotiation? First, make a list of everything you have that your counterpart might want as part of a deal. I mean everything. Your counterpart may have many needs that are not readily apparent, including emotional and intangible ones. For example, a salesperson may be less interested in a high price or commission than getting a quick sale that will impress her boss, winning the monthly sales contest, or boosting her sagging morale. The more of these needs you can identify and offer to meet, the more value you have.
Then think of everything your counterpart has that you might want as part of an agreement. You probably won’t get everything on the list, but the point is to be aware of what’s out there. Then prioritize this list as discussed earlier. This will help you focus on your true interests and not get distracted by baubles.
I often ask the participants in my negotiation seminars whether they would like to negotiate with Donald Trump. Most smile nervously as they say no. “Why not?” I ask, although I already know the answer. They do not believe they would fare well in a negotiation with the tough, intimidating, and business-savvy Trump.
A few, however, raise their hand to indicate that they would like to do a deal with The Donald. Their reasoning is usually that they may not make the best deal, but they would learn from the experience.
I suggest there is another reason: it would be a great story to tell future negotiating partners. Imagine … You’re in the middle of a negotiation, and you say, “This reminds me of a deal we made with Donald Trump a few months ago. We agreed to blah blah blah blah blah …” Your negotiating partner is now thinking, “Wow! This guy did a deal with Donald Trump? I’m impressed—he must really be a bigger bigwig than I thought! I’ve got to close this deal.” It would be great for your reputation—and your ego—to be able to drop Trump’s name in this manner. And you can be sure Donald Trump knows that dealing with him is a currency that has intangible yet very real value, and factors it into his negotiating demands!
You may not be a celebrity like Donald Trump, but you might be able to identify other hard to recognize currencies and extract added value from them.
Many years ago I attended a Cheap Trick concert. Rick Nielsen, the lead guitarist, had a habit of flinging his picks into the audience and quickly grabbing another one to continue playing. All night long the picks were flying around me, but I didn’t get one. This was before the Internet or eBay, so if I was to get a pick, I had to get it then and there.
After the final encore I walked up to the stage, hoping to find one. No luck. I called out to one of the roadies, who was busy packing up equipment.
“Hey, are there any more picks?”
“Sorry dude, they’re all gone. Cough, cough … hack … cough, cough!”
“It sounds like you’ve got a bad cough.”
“Yeah man, my throat’s killing me. Cough, cough.”
It was winter and we were outdoors. I also had a cough. And I had a pocketful of cough drops. I saw my opportunity.
“I’ve got some cough drops. If you can find me a pick, they’re yours.”
He went into the band’s trailer and came out a few minutes later with a pick. We made the trade. Win-win!
I got a piece of genuine rock and roll memorabilia worthy of a spot in the Hard Rock Cafe, something I valued highly. What did I give up for it? A handful of cough drops. Cost to me: zero. I had a whole bag of them at home, twenty minutes away.
The roadie, with a few hours of work in the cold night air ahead of him, without a car in a strange city, and with no drugstore nearby, got the one thing that could make his life better at that moment. And what did it cost him to give me the pick? Nothing! He nicked it from the guitar player!
We each got something we valued highly without giving up anything of value to us. This is negotiating alchemy, creating value out of nothing. Sweet!
Was it just luck? No. I understood my counterpart’s needs. I was also aware of the currencies, even though he did not know I had cough drops. Often, one or both parties is not aware of the currencies. That’s the value of information exchange.
While I was delighted with the result, I later realized that I might have done better. I should have asked for the guitar!
THE ALCHEMY OF NEGOTIATION: LEVERAGING CURRENCIES
It is easy to assume that others see things as we do. After all, we are rational, successful, and must have done something right to end up where we are today. Surely we know what is right, good, and important. If we want something, everyone else must want it too. If we value something, others must value it as well.
Of course, we all see things differently. One sister sees an orange and wants juice, another sees it and wants to bake a cake. One values the juice and has no use for the rind, but the other needs the rind and doesn’t care about the juice.
One country wants land, and another only wants security.
One employee wants recognition, and another only wants more money.
We all have our own ideas about what we want, and that’s a good thing. It gives us a better chance of finding a win-win solution.
The problem is our mistaken assumption that others are like us. We need to learn that others are different and recognize—and exploit—these differences. The fact that others may value things differently creates an opportunity for a win-win outcome.
Somewhere in the wilderness, a cow defecates. This waste product, as the term implies, has no value to the cow. A farmer stumbles upon the dung. He thinks to himself, “I can use this dung to make bricks and build a house. I can use this as fuel to cook my dinner and warm my family. I can use this to fertilize my crops and improve my livelihood.” To the farmer, this waste product is like gold.
Closer to home, a restaurant manager ponders what to do with her used cooking oil. She could dump it in the alley, creating a stench and risking a citation from the health inspector. She could pay a waste removal company to dispose of it. Or, she could sell it to a company that converts used oil into fuel.
One man’s trash is another man’s treasure. At times you will find that you value something far more than the other party, and vice versa. This is an ideal opportunity to create value. If you can give the other side something it values highly at little or no cost to yourself, you can get a lot of mileage out of it. Perhaps they can do the same for you. Now you each give up a little to gain a lot. You are creating value out of nothing (or almost nothing)! This is a key to reaching win-win agreements.
Kyle MacDonald was a Canadian handyman, blogger, and aspiring writer. In 2005, he went online and offered to trade a red paper clip for anything of
greater value. About one year later, he completed his 14th and final trade, each time leveraging greater value. His trades were:
• a red paper clip
• a novelty pen shaped like a fish
• a handmade ceramic doorknob
• a camping stove
• a 1,000-watt generator
• a beer keg with neon Budweiser sign
• a snowmobile
• a trip to Yahk in the Canadian Rockies
• a van
• a recording contract
• one year of rent-free accommodation in a house in Phoenix, Arizona
• an afternoon hanging out with rock star Alice Cooper
• a Kiss (the rock band, not the candy) snow globe
• a paid speaking role in a Hollywood movie
• a two-story farmhouse in Kipling, Saskatchewan, Canada
Several of MacDonald’s trades appear to be for items of comparable value. For example, trading a generator for a beer keg and neon sign sounds equitable.
Some of his transactions, however, appear ludicrous, for example, a snow globe for a movie role. Most people would value a snow globe at only a few dollars, if they wanted it at all. But if you have a huge collection of snow globes, you might be willing to pay a high price for a special acquisition. And while many people would kill for a movie role, a Hollywood producer has plenty of them, and filling them can be a chore.
These differences in the way individuals assign value to currencies open up a world of possibilities and increase the likelihood of a favorable result in a negotiation.
Some of MacDonald’s traders valued more than the tangible items they were exchanging. They may have valued being part of this wacky quest, getting a small measure of fame, or perhaps they just wanted to help.
The town of Kipling gave up a house, but got a lot in return. They held American Idol-style auditions to fill the movie role, raised some money for the town coffers, and put up the world’s largest red paper clip as a town landmark, all generating a huge amount of publicity (by Kipling standards). These currencies—though hard to value in dollars—were important to the town.
WIN-WIN Page 5